Hang Lung Properties and the Chengdu Decision (B)

Abstract

Second phase of auction for a prime retail development parcel in Chengdu, China. Competition forces the firm to revisit all of its land purchase criteria. Hang Lung Properties is known for rigorous due diligence, for discipline in buying property, and for good understanding of market cycles. The (B) case reveals the firms assumptions in the Chengdu situation, as compared to what students had to derive on their own in the (A) case. The (B) case also reviews strategic focus with respect to asset classes and geography, as well as best practices for what to look for in cities that will be attractive for superblock mixed use projects.

Learning Objective: Teaches how to assess value of a proposed large scale real estate development, how to evaluate land parcels, how to work backwards into value of land at auction, strategic discipline in real estate with respect to asset classes (retail, office, residential), with respect to geography (Hong Kong, first tier cities in China, second tier cities in China), and with respect to infrastructure.